CPS is set to name solar plant selection

PublishedJanuary 11, 2012

400-megawatt facility by OCI will mean 800 jobs.

Wednesday, January 11, 2012

By Tracy Idell Hamilton
San Antonio Express-News

CPS Energy is expected to announce today that OCI Solar Power, whose parent is a South Korean chemical company, has been selected to build 400 megawatts of solar power and bring more than 800 jobs to San Antonio, sources close to the deal say.

CPS Energy on Tuesday would not confirm the identity of the company, which it will announce at an 11 a.m. news conference. A call to OCI Solar Power, headquartered in Atlanta, was not immediately returned.

The company is owned by OCI Company Ltd., which was founded in 1959 and is traded on the Seoul stock exchange. It makes and sells inorganic chemicals, petro and coal chemicals, renewable energy and insulation materials.

That includes polysilicon, which is used to make the solar cells that are assembled into panels.

A year ago, OCI Co. acquired Chicago-based CornerStone Power Development as a way to get into the renewable energy market.

The resulting company, OCI Solar Power, now develops, owns and operates solar power plants in North America, according to its website, specializing in projects from 2 to 20 megawatts in size.

It owns or has under development more than 20 projects in the U.S. and Canada, totaling more than 150 megawatts of power.

The CPS project, which would be one of the largest in the country when it’s complete — 400 megawatts is enough to power 80,000 homes — will be built in small chunks around San Antonio and Bexar County.

"This is a substantial company, and not a solar company," said Nathaniel Bullard, lead North American solar analyst with Bloomberg New Energy Finance. "Given the turmoil in the solar industry, that can be a real strength."

OCI Co. has a "very high gross profit margin," he said, with a market cap of $6.6 billion and $3.5 billion in revenue in the last year — plenty of heft to finance the kind of deal CPS has demanded in exchange for buying all the solar power the project will generate for 25 years.

CPS confirmed the company it will announce today will invest about $100 million in new manufacturing facilities that will support 800-plus jobs with a payroll of at least $30 million.

That translates into "more than $1 billion in construction investment to Texas," according to CPS.

The utility would not talk about how much the deal will cost ratepayers, or how much it will pay for the power.

"This is just the beginning of the negotiation," spokeswoman Lisa Lewis said, "not the announcement of a completed contract." CEO Doyle Beneby said Monday he thought that process could take three months.

CPS is likely paying between 15 and 16 cents per kilowatt hour for its current solar power; sources say this deal could be as much as 30 percent less. It will not publicly disclose the cost of individual power contracts, saying that information is competitive, a stance backed by the state attorney general.

Coal, which makes up almost half of the utility’s current generation, costs as little as 1 to 2 cents per kilowatt hour, up to 7 to 11 cents if the cost of the plant is factored in. Adding the cost of new federal pollution regulations drives those costs up even further, Beneby has noted.

The solar project will be 400 megawatts of zero-emission energy — and zero water use, another benefit given the scarcity of that resource in South Texas.

The utility has a goal of increasing its renewable energy capacity to 1,500 megawatts by 2020 and reducing emissions.

"I think this project gets us very close," said Mayor Julián Castro, who sits on the CPS board of trustees and has been pushing for economic development with the goal of creating a new energy economy hub here.

The project will bring an entire spectrum of jobs to town, Castro said, from manufacturing to engineering.

OCI Solar Power beat out 18 other companies in a competitive bidding process.

It was a bidder for CPS’ earlier effort, which it closed in November without naming a winner. The utility reopened the process after making the requirements more specific, including a provision that the winning company get involved in some educational initiative related to renewable energy.

OCI did just that in June, partnering with San Antonio College for a solar undergraduate research program that looked at ways to cool solar panels to increase their efficiency.

Dan Dimitriu, engineering coordinator at the college, said the program, which was paid for by a grant from NASA, was successful and will continue next spring and summer.

"They liked the work of our students so much that they gave them a bonus," he said. "And if they need training for their technicians, we are ready to help them."

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